Is Rent-to-Rent Legal in the UK? What Landlords Should Check

Yes: rent-to-rent is legal in the UK when it's done openly and with the landlord's consent. Problems arise when it's done without permission or without the right checks. Here's what to look at before agreeing to a guaranteed rent or rent-to-rent arrangement.

What rent-to-rent means

In a rent-to-rent arrangement, a company rents your property and then lets it to others, for example as serviced accommodation. Guaranteed rent is the most common version: you receive a fixed monthly rent, and the company earns its margin from running the property well.

The checks to make

1. It must be done with your consent

A legitimate operator will tell you exactly how the property will be used, and the agreement will say so in writing. Subletting without the owner's consent is where most rent-to-rent problems come from.

2. Your mortgage

Residential and many buy-to-let mortgages restrict how a property can be let. Check that your lender allows a company let and the intended use, and get any consent in writing.

3. Your insurance

Standard landlord insurance may not cover short or serviced stays. Make sure the right cover is in place, and ask what insurance the operator holds.

4. Your lease, if it's a flat

Many leases restrict subletting, business use or short lets. Read the lease, and check with the freeholder or managing agent if anything is unclear.

5. Planning and local rules

In London, whole homes can only be let for short stays for 90 nights a year without planning permission. See our guide to the 90-night rule.

6. Licensing and safety

Depending on the layout and how many people stay, HMO or selective licensing may apply. Gas safety, electrical safety, fire safety and smoke alarms all need to be in order.

7. The operator

Ask for proof of the properties they already run and how long they've paid other landlords. Check that they're registered with Companies House, belong to a redress scheme such as the Property Redress Scheme, and are registered with the ICO.

Red flags

• Pressure to sign quickly, or a reluctance to put the use in writing.
• Requests to keep the arrangement from your lender or freeholder.
• No company details, no track record and no references.
• Vague answers on who pays bills, repairs or council tax.

The bottom line

Rent-to-rent done properly is a straightforward commercial arrangement: a clear agreement, the right consents and an operator with a track record. We're happy to walk you through our guaranteed rent agreement line by line, and your solicitor is welcome to review it.

This article is general information, not legal advice.